Wednesday, December 21, 2005

Oakland Port OKs W. Sac Deal

OAKLAND - In a move widely expected to restore long-term financial stability to the struggling Port of Sacramento and hand the Port of Oakland new options to deal with a torrent of cargo from Asia, the Bay Area port agreed Tuesday to begin managing the inland West Sacramento shipping facility next year.

The landmark deal, approved unanimously by the Port of Oakland's seven-member governing board, launches a six-month exploratory phase between the city of West Sacramento and the Port of Oakland to find a terminal operator in West Sacramento, chart the port's future and determine the Port of Oakland's share of revenue.

The initial phase could lead to a 20-year business deal between the two and halt a financial slide that has reached more than $6 million in West Sacramento during the last 5 1/2 years. The next step is similar approval expected Jan. 18 by the seven-member Port of Sacramento commission. The deal would go into effect immediately afterward.

"This is what I call excitement," said Oakland Port Commissioner Darlene Ayers-Johnson moments before the vote. "This is called commerce."

Other commissioners also spoke enthusiastically about the deal, labeling it a "very exciting strategic alliance."

The port's director of maritime operations, Wilson Lacy, said the proposed arrangement "is unique in our area. But it's not unique in Asia to have satellite operations and barging."

Lacy said several West Coast terminal operators have already expressed interest in running the Port of Sacramento beginning June 30.

Oakland, the nation's fourth busiest container port, handling almost 30 million tons of cargo last year on 1,902 ships, promises new marketing efforts to broaden the West Sacramento port's profile globally and eventually deepen its 43-mile ship channel to accommodate bigger ships carrying more profitable cargo.

The Port of Oakland also aims to barge Central Valley-bound cargo to West Sacramento, where it can be trucked to inland retail distribution centers such as Target Corp. in Woodland and Wal-Mart Stores Inc. in Tehama County.

Barging containers to West Sacramento is part of a regional growth strategy by the Port of Oakland that includes plans for a rail cargo shuttle to Shafter in Kern County to supply similar distribution centers in the southern San Joaquin Valley.

Both would help ease Bay Area freeway congestion and Interstate 80 traffic as 8,000-container superships begin arriving at the Port of Oakland. Typically, each individual container not carried by rail must be hauled by one truck. An inland water support facility would also help the Bay Area port meet agreements with its West Oakland neighbors to curb diesel emissions expected to result from the port's $1.2 billion port expansion plan.

The Port of Oakland, a city of Oakland operation that also includes Oakland International Airport, is dredging a deeper harbor, adding cargo cranes and expanding marine terminals.

"I believe there's a situation here that will make business sense for both the Port of Oakland and the Port of Sacramento," said Andrew Belknap, interim chief executive officer of the West Sacramento facility. "Where we have an inland waterway like this, we have a unique opportunity to have goods move efficiently and with environmental benefits."

The Oakland decision capped a tumultuous business and political year for the Port of Sacramento, which continued to lose hundreds of thousands of dollars while its board struggled to reinvent the facility and some even suggested closing the industrial operation opened in 1963. Just weeks ago, after bitter regional fights that lasted throughout the summer, the port's governing board agreed to hand the port to its home city of West Sacramento, which began managing it last Thursday.

That agreement still faces two ratifying votes next month by the Sacramento County Board of Supervisors and the Sacramento City Council after being approved by the Yolo County Board of Supervisors and the West Sacramento City Council.

The four regional governments have long run a port that reached a peak of nearly 3 million tons of cargo in the early 1980s. But collectively, four separate governments proved dysfunctional in addressing port losses stemming from market shifts, lack of the commercial real estate income that cushions budgets at most California ports and price-cutting competition by the Port of Stockton.

Last year, the Port of Sacramento serviced 51 ships and handled 736,0000 tons of bulk cargo, largely rice exports and imported cement, lumber and fertilizer for Central Valley farms. The port handles no container ships because its 30-foot ship channel is too shallow.